Metals Mining Firm Still Offers ‘Best Risk/Reward Among Its Peers’

A BMO Capital Markets report reviewed the changes to its model on the company.

In an August 3 research note, analyst Edward Sterck reported that BMO Capital Markets increased its forecasted shareholder return on Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE) to 9% from 8.4% to reflect the new US$1 billion share buyback program. “This places Rio Tinto well above the peer average of 6.8%,” he added.

In its model of Rio Tinto, BMO boosted its projected cost estimates within its copper and its bauxite, alumina and aluminium divisions. BMO decreased the expected prices for sales of alumina and bauxite, which led to a reduction in EBITDA as well. The miner’s 2018E group EBITDA was lowered by 7% and its 2019E EBITDA, by 4%.

Sterck concluded by saying the Rio Tinto story is “still attractive” and “despite slightly reduced EBITDA estimates, the company continues to offer the best risk/reward and commodity mix compared to its largest peers, in our opinion.”

BMO Capital has an Outperform rating and a £46 per share target price on Rio Tinto, whose current share price is around £38.81.

[NLINSERT]

Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following company mentioned in this article is a billboard sponsor of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

Disclosures from BMO Capital Markets, Rio Tinto, August 3, 2018

IMPORTANT DISCLOSURES

Analyst’s Certification
We, David Gagliano and Edward Sterck, hereby certify that the views expressed in this report accurately reflect our personal views about the
subject securities or issuers. We also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.

Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Company Specific Disclosures
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within
the past 12 months from Rio Tinto.
Disclosure 6C: Rio Tinto is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an
affiliate within the past 12 months: C) Non-Securities Related Services.

For Important Disclosures on the stocks discussed in this report, please click here.

By Dan Steinbock – As the UN climate conference concluded with the expected dissension, efforts to contain global climate change are weakening at the worst historical moment. Emerging and developing countries will pay much of the bill…

Risk Disclosure: Foreign Currency trading and trading on margin carries a high level of risk and can result in loss of part or all of your investment. Due to the level of risk and market volatility, Foreign Currency trading may not be suitable for all investors and you should not invest money you cannot afford to lose. Before deciding to invest in the foreign currency exchange market you should carefully consider your investment objectives, level of experience, and risk appetite. You should be aware of all the risks associated with foreign currency exchange trading, and seek advice from an independent financial advisor should you have any doubts.

All information and opinions on this website are for general informational purposes only and do not constitute investment advice.